1. The European Communities and the United States appeal from certain issues of law and legal interpretations in the Panel Report,
United States - Import Measures on Certain Products from the European Communities
(the "Panel Report")1. The Panel was established under the Understanding on Rules and Procedures Governing the Settlement of Disputes (the "DSU") to consider a complaint relating to measures taken by the United States with respect to certain imports from the European Communities.

2. The background to this dispute is set out in detail in the Panel Report.2 On 25 September 1997, the Dispute Settlement Body (the "DSB") adopted the reports of the panel and the Appellate Body in
European Communities - Regime for the Importation, Sale and Distribution of Bananas ("European Communities -
Bananas").3 The DSB recommended that the European Communities bring its banana import regime into conformity with its obligations under the Marrakesh Agreement Establishing the World Trade Organization (the "WTO Agreement"). On 1 January 1999, the period of time for implementation, established under Article 21.3(c) of the DSU, expired. At the DSB meeting of 2 February 1999, the United States alleged that the European Communities had failed to bring its banana import regime into compliance with the recommendations and rulings of the DSB in this dispute, and requested authorization to suspend the application of concessions or other obligations in accordance with Article 22.2 of the DSU. At the same meeting, the European Communities requested that the level of the suspension of concessions or other obligations proposed by the United States be referred to arbitration by the original panelists, in accordance with Article 22.6 of the
DSU.

3. In accordance with the 60-day time-frame provided for in Article 22.6 of the DSU, the decision of the arbitrators appointed under Article 22.6 was to be circulated on 2 March 1999. On that date, the arbitrators informed the United States and the European Communities that they were unable to circulate their decision, and requested additional information from the parties.4 On 4 March 1999, the Director of the Trade Compliance Division of the United States Customs Service issued a memorandum entitled "European Sanctions", in which he instructed Customs Area and Port Directors to take certain action with respect to designated products imported from the European Communities, with effect from 3 March 1999.

4. The Article 22.6 arbitrators circulated their decision on 9 April 1999.5 On 19 April 1999, the United States requested, and received, authorization from the DSB to suspend the application of concessions or other obligations in the amount determined by the arbitrators. Subsequent to this authorization, the United States imposed 100 per cent customs duties on designated products imported from the European Communities, an action referred to in this dispute as the "19 April action".

5. The Panel identified the measure at issue in this dispute as the "increased bonding requirements" imposed by the United States on a list of products imported from the European Communities as of 3 March 1999, and called this the "3 March Measure". In its Report circulated to Members of the World Trade Organization (the "WTO") on 17 July 2000, the Panel concluded:

Although the 3 March Measure is no longer in existence, we conclude that:

(a) The 3 March Measure was seeking to redress a WTO violation and was thus covered by Article 23.1 of the DSU; when it put in place the 3 March Measure the United States did not abide by the rules of the DSU, in violation of Article 23.1.

(b) By putting into place the 3 March Measure, the United States made a unilateral determination that the EC implementing measure violated the WTO, contrary to Articles 23.2(a) and 21.5, first sentence. In doing so the United States did not abide by the DSU and thus violated Article 23.1 together with Article 23.2(a) and 21.5 of the
DSU;

(c) The increased bonding requirements of the 3 March Measure as such led to violations of Articles II:1(a) and II:1(b), first sentence; the increased interest charges, costs and fees resulting from the 3 March Measure violated Article II:1(b) last sentence. The 3 March Measure also violated Article I of GATT; and

(d) In view of our conclusions in paragraph (c) above, the 3 March Measure constituted a suspension of concessions or other obligations within the meaning of Articles 3.7, 22.6 and 23.2(c) imposed without any DSB authorization and during the ongoing Article 22.6 arbitration process. In doing so the United States did not abide by the DSU and thus violated Article 23.1 together with Articles 3.7, 22.6 and 23.2(c) of the DSU.6

The Panel recommended that the DSB request the United States to bring its measure into conformity with its obligations under the
WTO Agreement.7

6. On 12 September 2000, the European Communities notified the DSB of its decision to appeal certain issues of law covered in the Panel Report and certain legal interpretations developed by the Panel, pursuant to Article 16.4 of the DSU,8 and filed a Notice of Appeal with the Appellate Body, pursuant to Rule 20 of the
Working Procedures for Appellate Review (the "Working Procedures"). On 22 September 2000, the European Communities filed an appellant's submission.9 The United States filed its own appellant's submission on 27 September 2000.10 Both the European Communities and the United States filed appellee's submissions on 9 October 2000.11 On the same day, Ecuador, India, Jamaica, and Japan each filed separate third participant's submissions, while Dominica and St. Lucia filed a joint third participant's submission. 12

7. The oral hearing in the appeal was held on 18 October 2000.13 The participants and the third participants presented oral arguments and responded to questions put to them by the Members of the Appellate Body Division hearing the appeal.